It has been a long time coming, but finally an automaker has
figured out how to grow in the current economy and shut up those
who have been calling for the death of the auto industry. One of
my favorite companies for 2011,
Ford Motor Co.
), has had a couple of really strong quarters, introduced three
future electric and hybrid cars this week, and said it is hiring
more than 7,000 new employees here in the United States over the
coming two years.
For smart investors looking for the
best stock picks
, this is the time to pounce. All of these news announcements are
creating the excitement and buying pressure that make F a
compelling buy, especially when you stack the stock up against
some of the other auto companies.
First of all, there aren't many choices for investors looking
for buying opportunities in the automotive industry. You've
pretty much got Ford,
Honda Motor Co.
Toyota Motor Corp.
) to choose from, and let's just say they haven't been able to
pull it off like Ford has.
General Motors just got its stock relisted in November. Since
then, shares are up about 13%, more than three times the 4% gain
for the Dow Jones Industrial Average in the same period. But
while shares have appreciated some over that time, the company
hasn't reported earnings yet, and it's just too soon to tell if
this is going to be a viable investment.
For instance, when December auto sales were released just last
week, General Motors' sales rose 7.5% over the same period last
year; however, that was in a month when overall auto sales were
up 11%. On the other hand, the annualized rate of auto sales is
picking up, and it could be a big year for GM if the company can
get it in gear. In short, watch and wait on GM for now.
Moving on, Toyota has kept its shares trading throughout the
recession, but with the recalls and safety issues this company
went through in the last year, investors are very skittish with
this stock and will sell out at the first sign of trouble. This
is not what you want from a stock, so I would advise avoiding
this one for now, too.
Then there's Honda. I would put HMC as a very distant second
to F when it comes to buying in the automotive sector of the
market. Honda has largely avoided negative headlines throughout
the recovery, but I'm concerned about the company's ability to
report strong earnings and keep operating margins moving in the
right direction. HMC is, at best, a hold at the current time.